Washington, November 18, 2025 – The U.S. Securities and Exchange Commission (SEC) has approved Dimensional Fund Advisors (DFA) to launch an exchange-traded fund (ETF) share class for 13 of its existing mutual funds, according to a notice posted on the SEC’s website late Monday.

This approval removes the final regulatory hurdle for DFA, making it the first new player in over two decades able to offer ETF share classes of existing mutual funds. The decision is expected to pave the way for approval of numerous similar applications from other asset managers seeking to combine the flexibility of ETFs with the strategies of established mutual funds.

Background and Market Context

Vanguard was the first and, until recently, the only asset manager to offer ETF share classes alongside traditional mutual fund share classes aimed at institutional, retail, or financial advisor clients. Vanguard’s 20-year patent on the product expired in 2023, prompting DFA to submit its SEC application shortly afterward. Preliminary approval was granted at the end of September 2025.

DFA intends to roll out the new ETF share classes across 13 existing mutual funds, although sources indicate the firm may phase the launches rather than implement all at once. The first offerings are expected to be available in early 2026.

Benefits for Investors

According to Eric Pan, president and chairman of the Investment Company Institute, the move is designed to deliver meaningful benefits to mutual fund shareholders.

ETF share classes can provide lower-cost, tax-efficient access to existing mutual funds because issuers can pool operating and distribution costs. Investors can select the investment strategy that aligns with their goals and then choose the ideal ETF or mutual fund wrapper for accessing that strategy, according to Gerard O’Reilly, co-CEO and co-CIO of DFA.

The SEC’s approval marks a significant step for asset managers looking to expand their ETF offerings and for investors seeking flexible and cost-effective ways to access mutual fund strategies in the growing ETF market.

Outlook for the Asset Management Industry

Industry experts predict that DFA’s ETF share class rollout will encourage other firms to submit similar applications, potentially transforming the way mutual funds are offered in the U.S. market. Analysts highlight that the combination of ETF efficiency with established mutual fund strategies could become a major trend in 2025 and beyond.